Crops Analysis | April 26, 2022
Price action: July corn futures rose 3 1/2 cents to $8.01 1/2, near mid-range. December futures rose 9 1/2 cents to $7.43 1/2.
Fundamental analysis: New-crop December futures led gains after USDA showed U.S. corn planting progress at a nine-year low, stirring concern over reduced yield potential for late-seeded crops. USDA late Monday reported 7% of the corn crop was planted as of April 24, up from 4% a week earlier and well under the 15% five-year average pace for that date. In only seven years since 1986 has corn planting progress as of April 24 been reported in single-digits.
The near-term weather outlook for the Corn Belt indicates farmers will make little headway through at least the rest of April, with temperatures dropping near freezing early this week and more rain projected later this week. However, over the next two weeks “conditions for fieldwork will improve… and some planting should advance between rain events,” World Weather Inc. said today.
Technical analysis: Corn futures bulls have a strong near-term technical advantage. The next upside price objective for bulls is to close July futures above solid longer-term resistance at the record high of $8.43 3/4. The next downside target for bears is closing July below support at $7.50. First resistance is seen at the contract high of $8.14, then $8.25. First support is at today’s low of $7.93 1/4, then last week’s low of $7.80 1/2.
What to do: Get current with advised 2021- and 2022-crop sales.
Cash-only marketers: You should be 90% sold on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.
Price action: July soybeans fell 3 1/2 cents to $16.71 3/4, while November futures gained 8 1/2 cents to $15.02 3/4. July soymeal dropped $8.60 to $437.00 per ton, the contract’s lowest close since Feb. 15. July soyoil gained 236 points to 82.44 cents per pound, a lifetime-high settlement.
Fundamental analysis: Soy complex futures ended mixed, with nearby soyoil futures closing at a record high as Indonesia’s impending halt to some palm oil-based products exacerbated concern over tight global vegetable oil supplies. Malaysian palm oil futures rose nearly 3% on a smaller supply outlook from Indonesia, which will ban exports of refined, bleached and deodorized (RBD) palm olein April 28 until prices of bulk cooking oil drop to 14,000 per litre. The ban will not affect crude palm oil shipments. RBD palm olein, which is produced by crushing palm fruit and removing impurities, accounts for about 40% of Indonesia's total shipments of palm oil products, Reuters reported.
Bullish soyoil news and fresh export business generated limited buying interest in nearby soybean futures, which posted a mixed performance amid spillover pressure from sharp declines in soymeal. Early today, USDA reported daily soybean sales of 132,000 MT for delivery to China during the 2022-23 marketing year and 133,000 MT for delivery to “unknown destinations,” with 78,000 MT is for delivery during 2021-22 and 55,000 MT for delivery during 2022-23. Today’s announcement came a day after USDA reported soybean sales to China totaling 534,000 MT for 2021-22 and 2022-23.
Technical analysis: July soybeans settled near the middle of today’s range, possibly signaling a near-term consolidation phase after a three-week uptrend faltered the previous two sessions. The July contract has firm initial support at the 20-, 40- and 50-day moving averages ($16.51, 16.52 1/4 and $16.42 1/4, respectively). A push below those levels could signify a near-term peak and may embolden bears to test the psychologically important $16.00 level and the April low at $15.60 1/2. Key resistance is seen at last week’s high of $17.34 and the contract high at $17.41.
Technicals have turned increasingly bearish in July soymeal, which closed at a two-month low and is nearing the 50-day moving average at $429.00. Soyoil’s technical posture remains bullish, with the market in a steep four-week uptrend and most-active July closing near the contract high of 83.21 cents.
What to do: Get current with advised 2021- and 2022-crop sales.
Hedgers: You should be 95% sold in the cash market on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.
Cash-only marketers: You should be 85% sold on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.
Price action: July SRW wheat rose 22 1/2 cents to $10.95, while July HRW wheat gained 11 1/2 cents to $11.64 1/2. July spring wheat rose 10 1/2 cents to $11.88 after posting a contract high at $11.99 3/4.
Fundamental analysis: Nearby SRW futures rose for the first session in six and HRW prices also climbed on concern over poor crop condition in the U.S. Plains. Spring wheat futures were supported by a slower-than-normal planting pace. USDA late yesterday reported an unexpected drop in winter wheat condition ratings, with the amount rated “good” or “excellent” falling three percentage points to 27%, the lowest for this time of year since 1989. When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop dropped 10.8 points to 260.7. The SRW rating rose 0.4 point to 350.6. The HRW crop stands 69.5 points below the five-year average for the date, while the SRW crop was 9.1 points below normal.
A limited moisture outlook for the Plains likely will continue to support winter wheat futures. The Texas Panhandle into eastern Colorado and western Kansas will continue to be “quite dry” over the next week, World Weather said. “There will be some showers and thunderstorms; however, this is not expected to cause a notable increase in soil moisture.” Frost and freezes were reported in central and northern Kansas, Nebraska and eastern Colorado this morning, but with none of the crop heading, potential impact was minimal, the forecaster said.
Technical analysis: Winter wheat bulls retain a near-term technical advantage but have faded recently. Despite today’s gains, July SRW wheat closed under the 10-day moving average, currently $10.99 1/4, for the fourth session in a row. Initial resistance is seen around a potential double top at last week’s highs in the $11.43 to $11.43 1/2 area, while initial support comes in at the 20-day moving average at $10.64 and yesterday’s low at $10.55 3/4. A push below those levels may prompt bears to target the 50-day moving average at $10.30.
July SRW wheat briefly pushed above its 10-day moving average to reach $11.07, the highest intraday price since $11.18 1/2 on April 20. First support is seen at last week’s low of $11.33 3/4, then $11.20.
What to do: Get current with advised 2021- and 2022-crop sales.
Hedgers: You should be 90% sold on 2021-crop in the cash market. You have 10% of 2021-crop hedged in July SRW futures at $8.75 1/4. You should also have 50% of expected 2022-crop forward-sold for harvest delivery.
Cash-only marketers: You should be 90% sold on 2021-crop. You should also have 50% of expected 2022-crop forward-sold for harvest delivery.
Price action: July cotton futures rose 27 points to 135.68 cents per pound, while new-crop December gained 43 points to 118.71 cents.
Fundamental analysis: Cotton futures continued a recent pattern of tracking crude oil prices, which extended rebound from yesterday’s lows. Both markets have been supported in part by accelerating global inflation. Still, the short-term cotton trend points lower, due largely to disappointing USDA export sales. USDA’s Crop Progress report may have also weighed on cotton futures. The U.S. crop was 12% planted as of April 24, slightly ahead of the 11% five-year average. However, excluding California’s plantings reaching 85% completed and Texas plantings at 19%, the national average would likely be running behind normal.
Concerns about a potential recession continue to hang over cotton, though today’s monthly Consumer Confidence index from the Conference Board at 107.3 slipped just 0.3 from March. The implied firmness probably explains a portion of the ongoing strength exhibited by the U.S. dollar, which reached a two-year high today. The trade-weighted dollar index rose to a fresh two-year high today.
Technical analysis: The balance between bulls and bears in July cotton futures seems equal at this point, with the contract again settling quite close to its 20-day moving average around 135.71. Look for strong support at yesterday’s low of 132.33, then at the April 11 low of 130.25. The 40-day moving average places additional support at 127.69. A break below that point would open the door to a test of psychological support around 125.00. Initial resistance will likely emerge at the contract’s 10-day moving average near 138.61, with backing from psychological resistance near 140.00. A push above that level would have bulls targeting the April 14 high at 144.78, then the 150.00 level.
What to do: Get current with advised 2021- and 2022-crop sales.
Hedgers: You are 100% priced in the cash market on 2021-crop. You should also be 50% forward-priced for harvest delivery on expected 2022-crop production.
Cash-only marketers: You should be 90% priced on 2021-crop. You should also be 50% forward-priced for harvest delivery on expected 2022-crop production.
